Finance (No. 4) Bill

Stephen Williams Excerpts

Thursday 19th April 2012 Commons Chamber

[Dr Whiteford]

I agree entirely. It is about not only rural and transport costs, but increases in VAT, cuts in fuel allowances and so forth. All these things have put a real squeeze on people living on fixed incomes, who have little opportunity to find money from any other source. These have not been easy financial times for those on fixed incomes, who have been the forgotten victims of the financial crisis. It is not fair to say that pensioners have got off lightly so far from the public spending squeeze—quite the reverse. In considering changes to age-related allowances, we need to understand that the granny tax will tighten the screw on people who have already had significantly to tighten their belts in recent times.

Those affected by this measure are all living on below-average incomes. Most will have paid tax throughout their working lives, and most thought they were doing the responsible thing by saving for their retirement. Crucially, they do not have the opportunity to find alternative sources of income. They are on fixed incomes and are living off savings.

[Stephen Williams (Bristol West) (LD)]

Will the hon. Lady give way?

[Dr Whiteford]

I was about to wind up, but I would be delighted to take an intervention.

[Stephen Williams]

The hon. Lady just said that this group of people are on below-average incomes. That might be true across the broad span of the population, which includes people in work on enormous salaries, but for pensioners, surely they are on way-above-average incomes.

[Dr Whiteford]

The hon. Member for Leeds West pointed out that nobody on an income of more than £25,500 a year will be affected by this measure. Frankly, with average earnings above that, I do think that most of those pensioners are living in what most people would consider to be quite modest circumstances, particularly when, as I have already argued, they have to pay much greater heating costs. Their lifestyles are not without particular burdens that they have to bear, and they do not have a chance to improve them.

--- Later in debate ---

[Graham Evans]

I am not sure about those figures, but I would go back to my original point: if the 50% tax were so important to the hon. Gentleman and his colleagues, why did Labour not introduce it 13 years ago?

[Stephen Williams]

Perhaps I can help my hon. Friend with his rhetorical question. Apart from Mr Williams in the Chair, the Minister and me, and the delightful Labour Whip, the hon. Member for West Ham (Lyn Brown), everyone in the Chamber happens to be from the 2010 intake and probably did not witness members of the Labour Government cheering when they produced tax cuts for the super-rich—they reduced their capital gains and income taxes while at the same time raising tax for the poorest by abolishing the 10p rate. Therefore, in fact, the pressure was all in the opposite direction.

[Graham Evans]

I am grateful for the hon. Gentleman’s astuteness in recognising that most hon. Members in the Chamber are relatively new. He raises a good point, but I want to go back to the one made by the hon. Member for Livingston (Graeme Morrice). My hon. Friend the Member for Stourbridge made the point that the top 1% richest people in the country now contribute 30% of tax to the UK Exchequer. In 1976, when Denis Healey, the famous Labour Chancellor, said he would squeeze the rich until the pips squeak, the top 1% richest people in the country contributed only 11%. So the 1% now contribute significantly more. I would be interested to hear how much more the hon. Gentleman feels they should contribute.

The Bill contains a raft of additional measures, some of which have been mentioned, to promote growth, especially in the north of England. There are far too many to list but I will point out a few that as a northern Member I especially welcome. Enterprise loans to help young people to set up and grow their own businesses are a great idea to foster ambition and creativity among the next generation. I firmly believe that what matters is not where someone comes from or went to school but where they are going, and there is no better way for young people to get on than starting up their own business, working for themselves, employing other people, growing that business and contributing to wealth creation.

The introduction of an above-the-line research and development tax credit is a simple but important move. It will help British businesses to stay competitive in the long run and send out the message that we back innovation. I am fortunate to have Daresbury science and innovation campus in my constituency. It is an internationally outstanding campus with more than 100 outstanding start-up businesses. I hope that they will be the Googles, Amazons and Microsofts of the future which are born in this country.

There are also excellent measures to help make the UK the technology capital of Europe, including a new £100 million fund to support investment in new university research facilities; £60 million of investment in the UK centre for aerodynamics; the allocation of £100 million for ultra-fast broadband in 10 of our biggest cities, including Manchester; £50 million to fund ultra-fast broadband in 10 smaller cities; and the extension of mobile coverage to 60,000 rural homes along 10 key roads.

--- Later in debate ---

[Katy Clark]

The hon. Gentleman is well aware that borrowing is going up. As I was saying, despite the fact that the Government are failing and have consistently failed to meet their own targets, the reality is that the cuts in public spending they have already made—and they propose more for the coming years—are having a disproportionate effect on the pensioner community.

[Stephen Williams]

Will the hon. Lady give way?

[Katy Clark]

I hope to come to a conclusion shortly, but I will give way for the last time.

[Stephen Williams]

The hon. Lady has twice said that pensioners are disproportionately affected by the collection of measures the Government are introducing to reduce the deficit. May I quote what Paul Johnson, the director of the Institute for Fiscal Studies, said about this particular measure? He said:

“Despite this morning’s headlines, this looks like a relatively modest tax increase on a group hitherto well sheltered from tax and benefit changes. From this Budget we calculate that pensioners will lose on average one quarter of one per cent of their income in 2014”.

How does she square that—the Opposition often like quoting the IFS—with pensioners being disproportionately affected by what the Government are doing?

[Katy Clark]

I think that the hon. Gentleman’s constituents will be very interested by his complacent approach. I suspect that he is well aware of the impact that the Government’s cuts are having on his constituents as well as mine, and well aware of the pain that his constituents are suffering. I am sure that he is also aware that pensioners rely disproportionately on social services and the public sector, and that the forthcoming cuts will make life particularly difficult for them.